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The Bookkeeping Basic You Can’t Afford to Ignore

Millions of small business owners and startup entrepreneurs are masters at creating great products and services, building effective teams and winning over customers. However, not everyone of them excels at basic bookkeeping; many of them would probably flunk it.

If you own a business and you don’t understand the different types of “accounts” your bookkeeper uses to organize your finances, measuring the success (or failure), all of your efforts will be fruitless.

To make it easy for you, below is the list of some basic types of bookkeeping accounts for a small business:

  • Cash

    . It cannot get more basic than this! All your business transactions pass through the Cash account, which is so important that often bookkeepers actually use two journals, Cash Receipts and Cash Disbursements, to track the activity.

  • Accounts Receivable

    . If your company sells products or services and doesn’t collect payment immediately, you have “receivables,” or money due from customers. You must track Accounts Receivable and keep it up to date so that you send timely and accurate bills or invoices to your customers.

  • Inventory

    . Products in stock that are unsold, resemble money sitting on a shelf and must be carefully accounted for and tracked. The numbers in your books should be periodically checked by doing physical counts of inventory on hand.

  • Accounts Payable

    . No one likes to send money out of the business, but a clear view of everything via your Accounts Payable makes it a little less throbbing. Clear yet comprehensive bookkeeping helps assure timely payments and avoid paying someone twice! Paying bills early can also qualify your business for discounts.

  • Loans Payable

    . If you’ve borrowed money to buy equipment, vehicles, furniture or other items for your business, this account shows payments with their due dates.

  • Sales

    . The Sales account keeps a track of all incoming revenue from what you sell. Doing so in a timely and accurate manner is critical to knowing where your business stands.

  • Purchases

    . The Purchases Account keeps the data about any raw materials or finished goods that you buy for your business. It’s a key component of calculating “Cost of Goods Sold” (COGS), which when subtracted from Sales helps you find your company’s gross profit.

  • Payroll Expenses.

     For many businesses, payroll expenses can be the biggest cost of all. Keeping this account accurate and up to date is essential for meeting tax and other government reporting requirements.

  • Owners Equity

    . This account keeps an eye on the amount an owner (or owners) puts into the business. Also referred to as net assets, owners equity reflects the amount of money an owner has once liabilities are subtracted from assets.

  • Retained Earnings. 

    The Retained Earnings account tracks any company profits that are reinvested in the business and are not paid out to the owners. Retained earnings are cumulative, which means they appear as a running total of money that has been retained since the company started. Managing this account doesn’t take a lot of time and is important to investors and lenders who want to track how the company has performed over time.

Many business owners think bookkeeping is a dreaded chore, but if you understand and effectively use the data your bookkeeper collects, bookkeeping can be your best partner. If you need help with your bookkeeping or just want to run your business more effectively than now, contact Opulent Accountants today to get paired with a mentor!

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Nishant Kosambi
Nishant Kosambi
2 February 2023
Excellent work by Dayan, Chamie, Lihini and the entire team. They have always been very professional and helpful. They have taken care of my business and personal tax obligations for many years. They have also sought financial solutions for me. I am very happy with how thorough Dayan is with his work. Clear communication and regular follow-ups all the way. 5 stars for this gem of a person and his team.
Ajith Ratnarajah
Ajith Ratnarajah
6 November 2022
These guys are very professional. You get the best of both worlds of a personalised service from a company rather than from an individual accountant. Their processes are well established. I would strongly recommend Opulent for any small, big companies and high net worth individuals.
Da Bella
Da Bella
12 August 2022
I consider myself extremely luck to be introduced to Dayan and his team. I found the solution to my loan requirement in one meeting itself...Super efficient, friendly and humble....Opulent finance rocks!!
srikanth chintalapudi
srikanth chintalapudi
11 July 2022
Dayan and his team did it again!!! They're proactive and provided timely advice in the recent sale of my investment property. They're advice saved me a lot of $$. Dayan and his team have been assisting me for the last 10+ years and they're always a lifesaver. Highly recommend!
Chamith Subasinghe
Chamith Subasinghe
15 February 2022
The team at Opulent have been extremely helpful and resourceful in securing a home loan for me. The responses have always been quick and progress made quickly through the loan application process. The advice provided by Opulent is high quality and very useful, special call out to Ishara and Dayan who have been very knowledgeable, experienced and professional. I have recommended Opulent to my friends and they have had positive experiences as well. I would highly recommend giving Opulent a go!
Daniel C
Daniel C
26 December 2021
Highly recommend Opulent Accountants! I've been lucky enough to deal with Hasi, Dayan and Charlene and all three of them have been a great help. Thanks guys.
Sam
Sam
5 November 2021
Great Accountants and Mortgage Brokers. Prompt, Professional, Well-informed and Responsive.
Kesh Aryaratne
Kesh Aryaratne
11 October 2021
The team at Opulent are professional, accessible, friendly and most importantly prompt in getting matters sorted. I have had the pleasure in dealing with both Dayan and Hasi who have guided me throughout and have been extremely helpful in getting my complex tax matters sorted on time and in a professional manner. Great work guys.
Mukesh S
Mukesh S
29 September 2021
I was apprehensive to take the plunge into refinancing my loans. However Dayan and his team were very patient and made it a point to respond to all my queries and doubts . They must be leading busy lives themselves, however they were flexible and accommodative of my requests for meetings at close of business hours. Further I noticed that they are particular in their and the customer's paperwork. Along with Dayan, I'd like to call out the efforts put in by Ishara for ensuring a smooth transition. She has ben patient with my many queries and diligent in her handling of the paperwork. Thank you Dayan and team.